Life insurance for children

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Child life insurance has two main benefits. Should the worst happen, either your child dies or suffers a critical illness, your policy can pay out to support you financially. If no claim is raised, then your child will get access to better life insurance policies when they’re older. 

We’re going to take you through the pros and cons of life insurance policies for children, so you can determine whether it’s right for your child.

In This Guide:

What are the benefits of child life insurance?

Policies can cover medical expenses or funeral costs in the unfortunate event of a child’s death, but also loss of income. You may work for a company that offers very generous bereavement leave, allowing you to return to work in your time and perhaps even paying you during. Yet this is rare, and in fact, UK law doesn’t demand bereavement pay be automatically granted.

Although the decision is down to your employer, most companies will only grant a few days leave. Therefore, a child life insurance policy can help to cover you financially during a time of emotional difficulty.

What other restrictions are there?

You’ll need to consider the duration you want cover for along with your child’s age. Policies will vary in length, some covering your child until they reach adulthood (which may be considered as up to age 23), whilst others provide insurance for life.

Be aware that it may be harder to get insurance if your child has a pre-existing condition.

Term-life and whole-life policies

A term-life policy is shorter-term, covering the child until adulthood or you choose to terminate the contract. You could take such a policy out for a set time – perhaps to cover a period of the child’s life where there is an increased risk. Your premium payments create a savings pot, it’s called a cash value and you can earn interest on this. If you have to claim, you’ll receive a payout; if not, then your child has more options for life insurance in the future.

A whole life policy is where your child is covered for their entire life, regardless of what happens or any circumstances that might prevent them from getting their own policy. This is called a life assurance policy: an assurance throughout your child’s life!

But this won’t come cheap: there is no fixed-term period for payment, meaning you may end up dishing out whopping figures to premiums over a long period of time. 

Adding a child to your own life insurance policy

Often, you can add your child to your own life insurance. Instead of taking out a policy for them alone, you may find adding them is not just more cost-effective but also offers greater benefits, such as critical illness cover. It’s a popular choice for parents and offers similar coverage to short-term policies.

If you’re considering taking out life insurance for your child, have a chat with your policy advisor to see what they can offer. Or if looking for new deals, make sure you compare prices to see which policies can add child life insurance on at the best price.

How much does child life insurance cost?

It’s not the biggest dent to the wallet; for around a fiver a month you can get cover for your child.  Of course, you can pay higher premiums for better coverage, but this is certainly where we’d argue you might be better off investing elsewhere. Likewise, whole-life policies are extremely costly.

Conversely, you may want to consider the emotional cost to yourself and family if you lose a child and what financial support you would need.

Should I take out a life insurance policy for my child?

So, why do it? Many insurance companies will tell you it sets your child up for the future.  If you have life insurance as a child it’s more likely you’ll be accepted for policies as an adult, regardless of any criteria that may otherwise exclude you. It’s setting your kid up to have access to a great choice of life insurance deals when they’re older, especially if they develop illnesses.

Yet the child won’t have any debts of their own, so the pay-out following a child’s death is to support the parent. Premium contributions could add up to a fair whack, but pay-outs on claims aren’t actually very high. Usually, they’re capped at around £25,000, although this will depend on your insurer so compare life insurance prices to get the maximum coverage.

Furthermore, while providers will parade savings opportunities made by your cash value, they will also charge a fee; this will often counteract any savings you’ve made, so other investment opportunities or saving systems may be a better choice.

Remember, having to make a claim is rare, so it may be best to look at other options for you and your child.

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Last reviewed: 1 October 2021

Next review: 1 November 2021